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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Virginia
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54-1972729
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. employer identification no.)
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10 Finderne Avenue, Building 10
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Bridgewater, New Jersey
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08807
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
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(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Emerging growth company
o
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As of
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As of
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September 30, 2017
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December 31, 2016
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(unaudited)
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Assets
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Current assets:
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Cash and cash equivalents
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$
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430,678
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$
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162,591
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Prepaid expenses and other current assets
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6,802
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5,816
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Total current assets
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437,480
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168,407
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In-process research and development
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58,200
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58,200
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Fixed assets, net
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8,975
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10,020
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Other assets
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1,551
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1,329
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Total assets
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$
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506,206
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$
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237,956
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Liabilities and shareholders’ equity
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Current liabilities:
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Accounts payable
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$
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9,348
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$
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10,439
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Accrued expenses
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18,802
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16,822
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Other current liabilities
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616
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728
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Total current liabilities
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28,766
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27,989
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Debt, long-term
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55,388
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54,791
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Other long-term liabilities
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747
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693
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Total liabilities
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84,901
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83,473
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Shareholders’ equity:
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Common stock, $0.01 par value; 500,000,000 authorized shares, 76,568,368 and 62,019,889 issued and outstanding shares at September 30, 2017 and December 31, 2016, respectively
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766
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620
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Additional paid-in capital
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1,313,006
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919,164
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Accumulated deficit
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(892,501
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)
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(765,236
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)
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Accumulated other comprehensive income (loss)
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34
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(65
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)
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Total shareholders’ equity
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421,305
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154,483
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Total liabilities and shareholders’ equity
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$
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506,206
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$
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237,956
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Three Months Ended September 30,
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Nine Months Ended September 30,
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||||||||||||
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2017
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2016
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2017
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2016
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Revenues
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$
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—
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$
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—
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$
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—
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$
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—
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Operating expenses:
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Research and development
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26,675
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23,433
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75,800
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67,851
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General and administrative
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17,408
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13,716
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47,767
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38,498
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Total operating expenses
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44,083
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37,149
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123,567
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106,349
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Operating loss
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(44,083
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)
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(37,149
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)
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(123,567
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)
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(106,349
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)
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Investment income
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326
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138
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649
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472
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Interest expense
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(1,496
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)
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(769
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)
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(4,459
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)
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(2,015
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)
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Other income, net
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101
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45
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206
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92
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Loss before income taxes
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(45,152
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)
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(37,735
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)
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(127,171
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(107,800
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)
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Provision for income taxes
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27
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25
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94
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71
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Net loss
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$
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(45,179
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)
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$
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(37,760
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)
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$
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(127,265
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$
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(107,871
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)
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Basic and diluted net loss per share
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$
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(0.69
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)
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$
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(0.61
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)
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$
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(2.01
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)
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$
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(1.74
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)
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Weighted average basic and diluted common shares outstanding
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65,312
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61,878
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63,199
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61,871
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Net loss
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$
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(45,179
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)
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$
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(37,760
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)
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$
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(127,265
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)
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$
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(107,871
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)
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Other comprehensive income (loss):
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Foreign currency translation gains (losses)
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76
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(17
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99
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(5
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Total comprehensive loss
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$
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(45,103
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$
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(37,777
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$
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(127,166
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)
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$
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(107,876
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)
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Nine Months Ended September 30,
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2017
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2016
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Operating activities
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Net loss
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$
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(127,265
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)
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$
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(107,871
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)
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Adjustments to reconcile net loss to net cash used in operating activities:
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Depreciation
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2,168
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1,756
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Stock-based compensation expense
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13,332
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13,879
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Amortization of debt issuance costs
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91
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250
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Accretion of back-end fee on debt
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506
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—
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Changes in operating assets and liabilities:
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Prepaid expenses and other assets
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(1,052
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)
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(230
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)
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Accounts payable
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(921
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)
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361
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Accrued expenses and other
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1,745
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3,109
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Net cash used in operating activities
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(111,396
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)
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(88,746
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)
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Investing activities
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Purchase of fixed assets
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(1,301
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)
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(3,428
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)
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Net cash used in investing activities
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(1,301
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)
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(3,428
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)
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Financing activities
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Proceeds from exercise of stock options
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2,953
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128
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Proceeds from issuance of debt
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—
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10,000
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Payment of debt issuance costs
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—
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(308
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)
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Proceeds from issuance of common stock, net
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377,703
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—
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Net cash provided by financing activities
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380,656
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9,820
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Effect of exchange rates on cash and cash equivalents
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128
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(4
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)
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Net increase (decrease) in cash and cash equivalents
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268,087
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(82,358
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)
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Cash and cash equivalents at beginning of period
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162,591
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282,876
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Cash and cash equivalents at end of period
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$
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430,678
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$
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200,518
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Supplemental disclosures of cash flow information:
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Cash paid for interest
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$
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3,876
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$
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2,471
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Cash paid for income taxes
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$
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62
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|
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$
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49
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•
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Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
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•
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Level 2 — Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the assets or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.
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•
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Level 3 — Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.
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Three Months Ended September 30,
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Nine Months Ended September 30,
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||||||||||||
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2017
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2016
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2017
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2016
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(in thousands, except per share amounts)
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Numerator:
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Net loss
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$
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(45,179
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)
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$
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(37,760
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)
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$
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(127,265
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)
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$
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(107,871
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)
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Denominator:
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Weighted average common shares used in calculation of basic net loss per share:
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65,312
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61,878
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63,199
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61,871
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Effect of dilutive securities:
|
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|
|
|
|
|
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|
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|
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Common stock options
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—
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—
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—
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|
|
—
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|
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RSUs
|
—
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|
|
—
|
|
|
—
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|
|
—
|
|
||||
Weighted average common shares outstanding used in calculation of diluted net loss per share
|
65,312
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|
|
61,878
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|
63,199
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|
61,871
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|
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Net loss per share:
|
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|
|
|
|
|
|
|
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|
|
||||
Basic and Diluted
|
$
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(0.69
|
)
|
|
$
|
(0.61
|
)
|
|
$
|
(2.01
|
)
|
|
$
|
(1.74
|
)
|
|
2017
|
|
2016
|
||
Stock options to purchase common stock
|
8,601
|
|
|
7,306
|
|
Unvested RSUs
|
47
|
|
|
89
|
|
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As of September 30,
2017 |
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As of December 31,
2016 |
||||
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(in thousands)
|
||||||
Accrued clinical trial expenses
|
$
|
8,560
|
|
|
$
|
7,071
|
|
Accrued compensation
|
6,634
|
|
|
6,937
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|
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Accrued professional fees
|
2,057
|
|
|
1,604
|
|
||
Accrued technical operation expenses
|
742
|
|
|
591
|
|
||
Accrued interest payable
|
424
|
|
|
438
|
|
||
Other accrued expenses
|
385
|
|
|
181
|
|
||
|
$
|
18,802
|
|
|
$
|
16,822
|
|
Notes payable
|
$
|
55,000
|
|
Accretion of back-end fee on debt
|
677
|
|
|
Debt issuance costs, unamortized
|
(289
|
)
|
|
Debt, long-term
|
$
|
55,388
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||
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2017
|
|
2016
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|
2017
|
|
2016
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Volatility
|
72%-73%
|
|
75%-76%
|
|
72%-74%
|
|
75%-77%
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Risk-free interest rate
|
1.73%-1.93%
|
|
1.00%-1.18%
|
|
1.73%-1.99%
|
|
1.00%-1.73%
|
Dividend yield
|
0.0%
|
|
0.0%
|
|
0.0%
|
|
0.0%
|
Expected option term (in years)
|
6.25
|
|
6.25
|
|
6.25
|
|
6.25
|
Weighted average fair value of stock options granted
|
$9.59
|
|
$7.79
|
|
$10.18
|
|
$8.74
|
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Number of
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Life in Years
|
|
Aggregate
Intrinsic
Value (in
thousands)
|
|||||
Options outstanding at December 31, 2016
|
7,116,706
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|
$
|
13.30
|
|
|
|
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|
|
|
Granted
|
2,207,390
|
|
|
$
|
15.42
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|
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Exercised
|
(336,135
|
)
|
|
$
|
8.78
|
|
|
|
|
|
|
|
Forfeited or expired
|
(386,668
|
)
|
|
$
|
15.59
|
|
|
|
|
|
|
|
Options outstanding at September 30, 2017
|
8,601,293
|
|
|
$
|
13.92
|
|
|
7.65
|
|
$
|
148,771
|
|
Vested and expected to vest at September 30, 2017
|
8,269,230
|
|
|
$
|
13.88
|
|
|
7.60
|
|
$
|
143,327
|
|
Exercisable at September 30, 2017
|
3,904,073
|
|
|
$
|
12.46
|
|
|
6.40
|
|
$
|
73,193
|
|
Outstanding as of September 30, 2017
|
|
Exercisable as of September 30, 2017
|
||||||||||||||||
Range of Exercise Prices ($)
|
|
Number of Options
|
|
Weighted Average Remaining Contractual Term (in years)
|
|
Weighted Average Exercise Price ($)
|
|
Number of Options
|
|
Weighted Average Exercise Price ($)
|
||||||||
3.03
|
|
|
4.55
|
|
|
988,195
|
|
|
4.89
|
|
3.59
|
|
|
988,195
|
|
|
3.59
|
|
6.90
|
|
|
6.90
|
|
|
137,577
|
|
|
5.47
|
|
6.90
|
|
|
100,077
|
|
|
6.90
|
|
6.96
|
|
|
10.85
|
|
|
1,081,121
|
|
|
8.55
|
|
10.76
|
|
|
289,330
|
|
|
10.52
|
|
11.14
|
|
|
12.58
|
|
|
1,095,757
|
|
|
6.65
|
|
12.17
|
|
|
735,792
|
|
|
12.16
|
|
12.66
|
|
|
13.58
|
|
|
185,880
|
|
|
7.76
|
|
13.24
|
|
|
89,704
|
|
|
13.29
|
|
13.67
|
|
|
13.67
|
|
|
865,660
|
|
|
9.27
|
|
13.67
|
|
|
—
|
|
|
—
|
|
13.94
|
|
|
15.91
|
|
|
862,300
|
|
|
8.01
|
|
14.97
|
|
|
339,372
|
|
|
14.55
|
|
16.07
|
|
|
16.16
|
|
|
1,009,781
|
|
|
7.93
|
|
16.13
|
|
|
463,410
|
|
|
16.12
|
|
16.19
|
|
|
17.16
|
|
|
871,266
|
|
|
9.34
|
|
17.10
|
|
|
31,741
|
|
|
16.30
|
|
17.24
|
|
|
27.38
|
|
|
1,503,756
|
|
|
7.41
|
|
21.20
|
|
|
866,452
|
|
|
21.13
|
|
|
Number of
RSUs
|
|
Weighted
Average
Grant Price ($)
|
||
Outstanding at December 31, 2016
|
89,194
|
|
|
10.85
|
|
Granted
|
46,914
|
|
|
17.16
|
|
Released
|
(89,194
|
)
|
|
(10.85
|
)
|
Outstanding at September 30, 2017
|
46,914
|
|
|
17.16
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in millions)
|
||||||||||||||
Research and development expenses
|
$
|
1.8
|
|
|
$
|
1.7
|
|
|
$
|
4.8
|
|
|
$
|
4.6
|
|
General and administrative expenses
|
2.9
|
|
|
3.4
|
|
|
8.5
|
|
|
9.3
|
|
||||
Total
|
$
|
4.7
|
|
|
$
|
5.1
|
|
|
$
|
13.3
|
|
|
$
|
13.9
|
|
•
|
risks that the full six-month data from the CONVERT study (the CONVERT study or the 212 study) or subsequent data from the remainder of the study’s treatment and off‑treatment phases will not be consistent with the top-line six-month results of the study;
|
•
|
uncertainties in the research and development of our existing product candidates, including due to delays in data readouts, such as the full data from the CONVERT study, patient enrollment and retention or failure of our preclinical studies or clinical trials to satisfy pre‑established endpoints, including secondary endpoints in the CONVERT study and endpoints in the CONVERT extension study (the 312 study);
|
•
|
failure to obtain, or delays in obtaining, regulatory approval from the US Food and Drug Administration (FDA), Japan’s Ministry of Health, Labour and Welfare (MHLW), the European Medicines Agency (EMA), and other regulatory authorities for our product candidates or their delivery devices, such as the eFlow Nebulizer System, including due to insufficient clinical data, selection of endpoints that are not satisfactory to regulators, complexity in the review process for combination products or inadequate or delayed data from a human factors study required for US regulatory approval;
|
•
|
failure to maintain regulatory approval for our product candidates, if received, due to a failure to satisfy post-approval regulatory requirements, such as the submission of sufficient data from confirmatory clinical studies;
|
•
|
safety and efficacy concerns related to our product candidates;
|
•
|
lack of experience in conducting and managing preclinical development activities and clinical trials necessary for regulatory approval, including the regulatory filing and review process;
|
•
|
failure to comply with extensive post‑approval regulatory requirements or imposition of significant post‑approval restrictions on our product candidates by regulators;
|
•
|
uncertainties in the rate and degree of market acceptance of product candidates, if approved;
|
•
|
inability to create an effective direct sales and marketing infrastructure or to partner with third parties that offer such an infrastructure for distribution of our product candidates, if approved;
|
•
|
inaccuracies in our estimates of the size of the potential markets for our product candidates or limitations by regulators on the proposed treatment population for our product candidates;
|
•
|
failure of third parties on which we are dependent to conduct our clinical trials, to manufacture sufficient quantities of our product candidates for clinical or commercial needs, including our raw materials suppliers, or to comply with our agreements or laws and regulations that impact our business;
|
•
|
inaccurate estimates regarding our future capital requirements, including those necessary to fund our ongoing clinical development, regulatory and commercialization efforts as well as milestone payments or royalties owed to third parties;
|
•
|
failure to develop, or to license for development, additional product candidates, including a failure to attract experienced third‑party collaborators;
|
•
|
uncertainties in the timing, scope and rate of reimbursement for our product candidates;
|
•
|
changes in laws and regulations applicable to our business and failure to comply with such laws and regulations;
|
•
|
inability to repay our existing indebtedness or to obtain additional capital when needed;
|
•
|
failure to obtain, protect and enforce our patents and other intellectual property and costs associated with litigation or other proceedings related to such matters;
|
•
|
restrictions imposed on us by license agreements that are critical for our product development, including our license agreements with PARI Pharma GmbH (PARI) and AstraZeneca AB (AstraZeneca), and failure to comply with our obligations under such agreements;
|
•
|
competitive developments affecting our product candidates and potential exclusivity related thereto;
|
•
|
the cost and potential reputational damage resulting from litigation to which we are a party, including, without limitation, the class action lawsuit pending against us;
|
•
|
loss of key personnel; and
|
•
|
lack of experience operating internationally.
|
Product Candidate/Target
Indications
|
|
Status
|
|
Next Expected Milestones
|
ALIS for NTM lung infections
|
|
l
We announced top‑line data for the CONVERT study on September 5, 2017. Based on top‑line results, the CONVERT study met its primary endpoint of culture conversion, which we define as three consecutive negative monthly sputum cultures by month six with statistical and clinical significance, with 29% of patients in the ALIS plus current guidelines-based therapy (GBT) arm achieving culture conversion, compared to 9% of patients in the GBT‑only arm (p<0.0001).
l
The CONVERT study is a randomized, open-label global phase 3 clinical study of ALIS in adult patients with treatment refractory NTM lung disease caused by MAC.
l
The FDA has designated ALIS as an orphan drug, a breakthrough therapy, and a qualified infectious disease product (QIDP).
l
The European Commission has granted an orphan designation for ALIS for the treatment of NTM lung disease.
|
|
l
We plan to pursue accelerated approval for ALIS in the US based on data from the CONVERT study. We intend to seek marketing approvals for ALIS in certain countries outside the US, when sufficient data are available. If approved, we expect ALIS would be the first inhaled antibiotic specifically indicated for the treatment of NTM lung disease caused by MAC in North America, Japan and Europe.
l
If approved, we plan to commercialize ALIS in the US, Japan, certain countries in Europe, and certain other countries.
|
INS1007 (oral reversible inhibitor of DPP1) for non-CF bronchiectasis and other rare diseases
|
|
l
We are in preparations for the WILLOW study, a global phase 2, randomized, double-blind, placebo-controlled, parallel-group, multi-center clinical study to assess the efficacy, safety and tolerability, and pharmacokinetics of INS1007 administered once daily for 24 weeks in subjects with non-CF bronchiectasis.
l
We are currently assessing our regulatory strategies with regard to orphan drug designation and other pathways that could expedite the development and regulatory reviews of INS1007 in the US and the EU.
|
|
l
We have received a "study may proceed letter" from the FDA and expect to commence enrollment in the WILLOW clinical study of INS1007 in the fourth quarter of 2017.
l
We are exploring the potential of INS1007 in various neutrophil-driven inflammatory conditions.
|
INS1009 (inhaled nanoparticle formulation of a treprostinil prodrug) for rare pulmonary disorders
|
|
l
The results of our phase 1 study of INS1009 were presented at the European Respiratory Society international congress in September 2016.
l
The phase 1 study was a randomized, double-blind, placebo-controlled, single ascending dose study of INS1009 for inhalation to determine its safety, tolerability, and pharmacokinetics in healthy volunteers.
|
|
l
We believe INS1009 may offer a differentiated product profile for rare pulmonary disorders, including PAH, and we are currently evaluating our options to advance its development including exploring its use as an inhaled dry powder formulation.
|
•
|
Completing the CONVERT study;
|
•
|
Preparing a New Drug Application (NDA) for submission under subpart H to the FDA for ALIS based on the primary endpoint of the CONVERT study;
|
•
|
Ensuring our product supply chain will support the commercialization, if approved, and future life cycle management programs of ALIS;
|
•
|
Preparing for potential commercialization of ALIS in the US, Japan, certain countries in Europe, and certain other countries;
|
•
|
Developing the core value dossier to support the global reimbursement of ALIS;
|
•
|
Supporting further research and lifecycle management strategies for ALIS, including exploring the potential use of ALIS as part of a front-line, multi-drug regimen and as maintenance monotherapy to prevent recurrence (defined as true relapse or reinfection) of NTM lung disease;
|
•
|
Starting enrollment of the WILLOW phase 2 study of INS1007 in non-CF bronchiectasis;
|
•
|
Generating preclinical findings from our earlier-stage program(s); and
|
•
|
Expanding our rare disease pipeline through corporate development.
|
|
|
2:1 Randomization
|
||
Patients Reporting STEAEs >3% in Either Arm
|
|
ALIS + GBT (n=223)
|
GBT (n=112)
|
|
Patients Reporting At Least One STEAE
|
|
20.2% (45)
|
17.9% (20)
|
|
System Organ Class
|
|
Preferred Term
|
|
|
Respiratory, Thoracic, Mediastinal Disorders
|
|
11.7% (26)
|
9.8% (11)
|
|
|
Hemoptysis
|
2.7% (6)
|
4.5% (5)
|
|
|
COPD (exacerbation)
|
3.1% (7)
|
0.9% (1)
|
|
Infections and Infestations
|
|
9.0% (20)
|
5.4% (6)
|
|
|
Pneumonia
|
3.6% (8)
|
1.8% (2)
|
|
Cardiac Disorders
|
|
0.4% (1)
|
4.5% (5)
|
|
Patient Deaths
|
|
2.7% (6)
|
4.5% (5)
|
Potential Market
|
|
Estimated Number of Patients with Diagnosed NTM Lung Disease
|
Estimated Number of Patients Treated for NTM Lung Disease Caused by MAC
|
Estimated Number of Patients Refractory to Treatment
|
|||
United States
|
|
75,000-105,000
|
|
40,000-50,000
|
|
10,000-15,000
|
|
Japan
|
|
125,000-145,000
|
|
60,000-70,000
|
|
15,000-18,000
|
|
EU5
|
|
14,000
|
|
4,400
|
|
1,400
|
|
•
|
Increased research and development expenses of
$3.2 million
, primarily resulting from an increase in expenses related to INS1007 and ALIS clinical trial expenses; and
|
•
|
Increased general and administrative expenses of
$3.7 million
, resulting from an increase in consulting fees relating to pre-commercial planning activities and higher compensation and related expenses due to an increase in headcount.
|
|
Quarters Ended September 30,
|
|
Increase (decrease)
|
|||||||||||
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
External Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|||
Clinical development & research
|
$
|
12,307
|
|
|
$
|
9,628
|
|
|
$
|
2,679
|
|
|
27.8
|
%
|
Manufacturing
|
2,884
|
|
|
2,967
|
|
|
(83
|
)
|
|
(2.8
|
)%
|
|||
Regulatory and quality assurance
|
1,100
|
|
|
401
|
|
|
699
|
|
|
174.3
|
%
|
|||
Subtotal—external expenses
|
$
|
16,291
|
|
|
$
|
12,996
|
|
|
$
|
3,295
|
|
|
25.4
|
%
|
Internal Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|||
Compensation and related expenses
|
$
|
8,373
|
|
|
$
|
8,086
|
|
|
$
|
287
|
|
|
3.5
|
%
|
Other internal operating expenses
|
2,011
|
|
|
2,351
|
|
|
(340
|
)
|
|
(14.5
|
)%
|
|||
Subtotal—internal expenses
|
$
|
10,384
|
|
|
$
|
10,437
|
|
|
$
|
(53
|
)
|
|
(0.5
|
)%
|
Total
|
$
|
26,675
|
|
|
$
|
23,433
|
|
|
$
|
3,242
|
|
|
13.8
|
%
|
|
Quarters Ended September 30,
|
|
Increase (decrease)
|
|||||||||||
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
General & administrative
|
$
|
9,355
|
|
|
$
|
9,097
|
|
|
$
|
258
|
|
|
2.8
|
%
|
Pre-commercial expenses
|
8,053
|
|
|
4,619
|
|
|
3,434
|
|
|
74.3
|
%
|
|||
Total general & administrative expenses
|
$
|
17,408
|
|
|
$
|
13,716
|
|
|
$
|
3,692
|
|
|
26.9
|
%
|
•
|
Increased R&D expenses of
$7.9 million
, primarily resulting from an increase in expenses related to INS1007 and higher compensation and related expenses due to an increase in headcount as compared to the prior period, partially offset by decreases in INS1009 research expenses; and
|
•
|
Increased general and administrative expenses of
$9.3 million
, primarily resulting from an increase in pre-commercial planning activities and higher compensation and related expenses due to an increase in headcount.
|
|
Nine Months Ended
September 30, |
|
Increase (decrease)
|
|||||||||||
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
External Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|||
Clinical development & research
|
$
|
30,614
|
|
|
$
|
26,266
|
|
|
$
|
4,348
|
|
|
16.6
|
%
|
Manufacturing
|
10,490
|
|
|
12,243
|
|
|
(1,753
|
)
|
|
(14.3
|
)%
|
|||
Regulatory and quality assurance
|
2,996
|
|
|
1,366
|
|
|
1,630
|
|
|
119.3
|
%
|
|||
Subtotal—external expenses
|
$
|
44,100
|
|
|
$
|
39,875
|
|
|
$
|
4,225
|
|
|
10.6
|
%
|
Internal Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|||
Compensation and related expenses
|
$
|
24,071
|
|
|
$
|
21,463
|
|
|
$
|
2,608
|
|
|
12.2
|
%
|
Other internal operating expenses
|
7,629
|
|
|
6,513
|
|
|
1,116
|
|
|
17.1
|
%
|
|||
Subtotal—internal expenses
|
$
|
31,700
|
|
|
$
|
27,976
|
|
|
$
|
3,724
|
|
|
13.3
|
%
|
Total
|
$
|
75,800
|
|
|
$
|
67,851
|
|
|
$
|
7,949
|
|
|
11.7
|
%
|
|
Nine Months Ended
September 30, |
|
Increase (decrease)
|
|||||||||||
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
General & administrative
|
$
|
27,364
|
|
|
$
|
26,789
|
|
|
$
|
575
|
|
|
2.1
|
%
|
Pre-commercial expenses
|
20,403
|
|
|
11,709
|
|
|
8,694
|
|
|
74.3
|
%
|
|||
Total general & administrative expenses
|
$
|
47,767
|
|
|
$
|
38,498
|
|
|
$
|
9,269
|
|
|
24.1
|
%
|
•
|
the timing and cost of our current and anticipated clinical trials of ALIS for the treatment of patients with NTM lung infections;
|
•
|
the decisions of the FDA, MHLW and EMA with respect to our potential applications for marketing approval of ALIS in the US, Japan and Europe, respectively; the costs of activities related to the regulatory approval process; and the timing of approvals, if received;
|
•
|
the costs associated with commercializing ALIS, if we receive marketing approvals; including the costs of establishing the sales and marketing capabilities to be prepared for potential commercial launches of ALIS, if approved;
|
•
|
the cost of filing, prosecuting, defending, and enforcing patent claims;
|
•
|
the timing and cost of our anticipated clinical trials, including for INS1007 and the related milestone payments due to AstraZeneca;
|
•
|
the costs of our manufacturing-related activities, including an increase in commercial inventory production and expansion projects related to our production capabilities; and
|
•
|
subject to receipt of marketing approval, the levels, timing and collection of revenue received from sales of approved products, if any, in the future.
|
|
Total
|
Less than 1 year
|
1 ‑ 3 Years
|
4 ‑ 5 Years
|
After 5 Years
|
||||||||||
|
(in thousands)
|
||||||||||||||
Debt obligations
|
|
|
|
|
|
||||||||||
Debt maturities
|
$
|
55,000
|
|
$
|
—
|
|
$
|
29,504
|
|
$
|
25,496
|
|
$
|
—
|
|
Contractual interest
|
16,157
|
|
5,158
|
|
8,520
|
|
2,479
|
|
—
|
|
|||||
Operating leases
|
4,293
|
|
1,511
|
|
2,162
|
|
620
|
|
—
|
|
|||||
Purchase obligations
|
6,075
|
|
2,700
|
|
3,375
|
|
—
|
|
—
|
|
|||||
Total contractual obligations
|
$
|
81,525
|
|
$
|
9,369
|
|
$
|
43,561
|
|
$
|
28,595
|
|
$
|
—
|
|
•
|
Identify potential product candidates;
|
•
|
Design and conduct appropriate laboratory, preclinical and other research;
|
•
|
Submit for and receive regulatory approval to perform clinical studies;
|
•
|
Design and conduct appropriate preclinical and clinical studies according to good laboratory practices and good clinical practices and disease-specific expectations of the FDA and other regulatory bodies;
|
•
|
Select and recruit clinical investigators and subjects for our studies;
|
•
|
Collect, analyze and correctly interpret the data from our studies;
|
•
|
Obtain data establishing adequate safety of our product candidates and demonstrating with statistical significance that our product candidates are effective for their proposed indications, as indicated by satisfaction of pre-established endpoints;
|
•
|
Submit for and receive regulatory approvals for marketing;
|
•
|
Submit for and receive reimbursement approvals for market access; and
|
•
|
Manufacture the product candidates and device components according to current good manufacturing practices (CGMP) and other applicable standards and regulations.
|
•
|
Our preclinical tests or clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional preclinical testing or clinical trials or we may abandon projects that we expect to be promising;
|
•
|
Regulators, ethics committees or institutional review boards (IRBs) may prevent us from commencing a clinical trial or conducting a clinical trial at a prospective trial site;
|
•
|
Enrollment in the clinical trials may take longer than expected or the clinical trials as designed may not allow for sufficient patient accrual to complete enrollment of the trial;
|
•
|
We may experience difficulties or delays due to the number of clinical sites involved in our clinical trials;
|
•
|
We may decide to limit or abandon our commercial development programs;
|
•
|
Conditions imposed on us by the FDA or any non-US regulatory authority regarding the scope or design of our clinical trials may require us to collect and submit information to regulatory authorities, ethics committees, IRBs or others for review and approval;
|
•
|
The number of patients required for our clinical trials may be larger than we anticipate or participants may drop out of our clinical trials at a higher rate than we anticipate;
|
•
|
Our third-party contractors, contract research organizations (CROs), clinical investigators, clinical laboratories, product suppliers or nebulizer supplier may fail to comply with regulatory requirements or fail to meet their contractual obligations to us in a timely manner;
|
•
|
We may have to suspend or terminate one or more of our clinical trials if we, regulators, ethics committees or the IRBs determine that the participants are being exposed to unacceptable health risks or for other reasons;
|
•
|
We may not be able to claim that a product candidate provides an advantage over current standard of care or future competitive therapies in development because our clinical studies may not have been designed to support such claims;
|
•
|
Regulators, ethics committees or IRBs may require that we hold, suspend or terminate clinical research for various reasons, including potential safety concerns or noncompliance with regulatory requirements;
|
•
|
The cost of our clinical trials may be greater than we anticipate;
|
•
|
The supply or quality of product used in clinical trials or other materials necessary to conduct our clinical trials may be insufficient or inadequate or we may not be able to reach agreements on acceptable terms with prospective contract manufacturers or CROs;
|
•
|
The effects of our product candidates may not be the desired effects or may include undesirable side effects or the product candidates may have other unexpected characteristics; and
|
•
|
Our competitors may be able to bring products to market before we do.
|
•
|
Experience increased product development costs, as we have in the past;
|
•
|
Be delayed in obtaining, or be unable to obtain, regulatory approval for one or more of our product candidates;
|
•
|
Obtain approval for indications that are not as broad as intended or entirely different than those indications for which we sought approval or labeling with black box or other warnings or contraindications;
|
•
|
Have the product removed from the market after obtaining regulatory approval; or
|
•
|
Face a shortened patent protection period during which we may have the exclusive right to commercialize our product candidates.
|
•
|
Investigator identification and recruitment;
|
•
|
Regulatory approvals to initiate study sites;
|
•
|
Patient population size;
|
•
|
The nature of the protocol to be used in the trial;
|
•
|
Patient proximity to clinical sites;
|
•
|
Eligibility criteria for the study;
|
•
|
The patients’ willingness to participate in the study;
|
•
|
Discontinuation rates; and
|
•
|
Competition from other companies’ potential clinical studies for the same patient population.
|
•
|
Labeling, such as black box or other warnings or contraindications;
|
•
|
Post-market surveillance, post-market studies or post-market clinical trials;
|
•
|
Packaging, storage, distribution, safety surveillance, advertising, promotion, recordkeeping and reporting of safety and other postmarket information;
|
•
|
Monitoring and reporting complaints, adverse events and instances of the failure of a product to meet specifications;
|
•
|
Compliance with CGMPs;
|
•
|
Changes to the approved product, product labeling or manufacturing process;
|
•
|
Advertising and other promotional material; and
|
•
|
Disclosure of clinical trial results on publicly available databases.
|
•
|
State wholesale drug distribution laws and the distribution of our product samples to physicians must comply with the requirements of the Prescription Drug Marketing Act of 1987;
|
•
|
Sales, marketing and scientific or educational grant programs must comply with federal and state laws; and
|
•
|
Pricing and rebate programs must comply with the Medicaid rebate requirements, and if products are made available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirements apply.
|
•
|
Issue warning letters or untitled letters asserting that we are in violation of the law;
|
•
|
Seek an injunction or impose civil or criminal penalties or monetary fines;
|
•
|
Suspend or withdraw regulatory approval;
|
•
|
Suspend or terminate any ongoing clinical trials;
|
•
|
Refuse to approve pending applications or supplements to applications submitted by us;
|
•
|
Suspend or impose restrictions on operations, including costly new manufacturing requirements;
|
•
|
Seize or detain products, refuse to permit the import or export of products, or require us to initiate a product recall;
|
•
|
Refuse to allow us to enter into supply contracts, including government contracts; and/or
|
•
|
Impose civil monetary penalties or pursue civil or criminal prosecutions and fines against our company or responsible officers.
|
•
|
The prevalence and severity of any side effects, including any limitations or warnings contained in a product’s approved labeling;
|
•
|
The efficacy and potential advantages over alternative treatments;
|
•
|
The pricing of our products;
|
•
|
Relative convenience and ease of administration;
|
•
|
The willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;
|
•
|
The strength of marketing and distribution support and timing of market introduction of competitive products;
|
•
|
Publicity concerning our products or competing products and treatments, including competing products becoming subject to generic pricing; and
|
•
|
Sufficient third-party insurance coverage and reimbursement.
|
•
|
Significant competition in seeking appropriate partners;
|
•
|
The complex and time-consuming nature of negotiation, documentation and implementation of agreements with third parties in the pharmaceutical industry;
|
•
|
Our potential inability to establish and implement collaborations or other alternative arrangements that we might pursue on favorable terms;
|
•
|
Our potential inability to control whether third parties devote sufficient resources to our programs or products, including with respect to meeting contractual deadlines;
|
•
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Our potential inability to control the regulatory and contractual compliance of third parties, including their processes and procedures, systems utilized to collect and analyze data, and equipment used to test drug product and/or clinical supplies;
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•
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Disagreements with third parties, including CROs, that result in a dispute over and loss of intellectual property rights, delay or termination of research, development, or commercialization of product candidates or litigation or arbitration;
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Contracts with our collaborators that fail to provide sufficient protection of our intellectual property; and
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•
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Difficulty enforcing the contracts if one of these third parties fails to perform.
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Failure to achieve expected synergies;
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•
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Difficulty and expense of assimilating the operations, technology and personnel of the acquired business;
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•
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Our inability to retain the management, key personnel and other employees of the acquired business;
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•
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Our inability to maintain the acquired company’s relationship with key third parties, such as alliance partners;
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Exposure to legal claims for activities of the acquired business prior to the acquisition;
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•
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The diversion of our management's attention from our core business; and
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•
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The potential impairment of goodwill and write-off of IPRD costs, adversely affecting our reported results of operations and financial condition.
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•
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Regulatory authorities may withdraw their approval or clearance of the product and may require recall of product in distribution;
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Regulatory authorities may require the addition of labeling statements, such as black box or other warnings or contraindications, or the issuance of “Dear Doctor Letters” or similar communications to healthcare professionals;
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Regulatory authorities may impose additional restrictions on marketing and distribution of the products, or other risk management measures, such as a REMS;
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We may be required to change the way the product is administered, conduct additional clinical studies or restrict the distribution of the product;
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We could be sued and held liable for harm caused to subjects; and
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We could be subject to negative publicity, including communications issued by regulatory authorities.
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A covered benefit under its health plan;
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•
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Safe, effective and medically necessary;
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Appropriate for the specific patient;
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Cost-effective; and
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Neither experimental nor investigational.
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Pay damages, including up to treble damages, royalties, and the other party’s attorneys’ fees, which may be substantial;
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Cease the development, manufacture, marketing and sale of products or use of processes that infringe the proprietary rights of others;
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Expend significant resources to redesign our products or our processes so that they do not infringe the proprietary rights of others, which may not be possible;
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Redesign our products or processes to avoid third-party proprietary rights, which means we may suffer significant regulatory delays associated with conducting additional clinical trials or other steps to obtain regulatory approval; and/or
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•
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Obtain one or more licenses arising out of a settlement of litigation or otherwise from third parties which license(s) may not be available to us on acceptable terms or at all.
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The ability to issue preferred stock with rights senior to those of our common stock without any further vote or action by the holders of our common stock. The issuance of preferred stock could decrease the amount of earnings and assets available for distribution to the holders of our common stock or could adversely affect the rights and powers, including voting rights, of the holders of our common stock. In certain circumstances, such issuance could have the effect of decreasing the market price of our common stock.
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The existence of a staggered board of directors in which there are three classes of directors serving staggered three-year terms, thus expanding the time required to change the composition of a majority of directors.
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The requirement that shareholders provide advance notice when nominating director candidates to serve on our Board of Directors.
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The inability of shareholders to convene a shareholders’ meeting without the chairman of the board, the president or a majority of the board of directors first calling the meeting.
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The prohibition against entering into a business combination with the beneficial owner of 10% or more of our outstanding voting stock for a period of three years after the 10% or greater owner first reached that level of stock ownership, unless certain criteria are met.
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In addition to severance agreements with our officers and provisions in our incentive plans that permit acceleration of equity awards upon a change in control, a severance plan for eligible full-time employees that provides such employees with severance equal to six months of their then-current base salaries in connection with a termination of employment without cause upon, or within 18 months following, a change in control.
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•
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Our limited experience operating our business internationally;
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•
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An inability to achieve the optimal pricing and reimbursement for ALIS or subsequent changes in reimbursement, pricing and other regulatory requirements;
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•
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Any implementation of, or changes to, tariffs, trade barriers and other import-export regulations in the US or other countries in which we operate;
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•
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Unexpected adverse events related to ALIS or our other product candidates occurring in foreign markets that we have not experienced in the US;
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•
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Economic and political conditions, including geopolitical events, such as war and terrorism, foreign currency fluctuations and inflation, which could result in increased or unpredictable operating expenses and reduced revenues and other obligations incident to doing business in, or with a company located in, another country;
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•
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Changes resulting from (i) the uncertainty and instability in economic and market conditions caused by the UK’s vote to exit the European Union; and (ii) the uncertainty regarding how the UK’s access to the EU Single Market and the wider trading, legal, regulatory and labor environments will be impacted by the UK’s vote to exit the European Union, including the resulting impact on our business; and
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•
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Compliance with foreign or US laws, rules and regulations, including data privacy requirements, labor relations laws, tax laws, anticompetition regulations, import, export and trade restrictions, anti- bribery/anti-corruption laws, regulations or rules, which could lead to actions by us or our licensees, distributors, manufacturers, other third parties who act on our behalf or with whom we do business in foreign countries or our employees who are working abroad that could subject us to investigation or prosecution under such foreign or US laws.
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INSMED INCORPORATED
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Date: November 2, 2017
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By
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/s/ Paolo Tombesi
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Paolo Tombesi
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Chief Financial Officer
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(Principal Financial and Accounting Officer)
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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Milestone Activity
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Milestone Deadline
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Completion of the INS-212 Clinical Study Report (CSR)
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[***]
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Completion of submission to US FDA for the Drug Product in NTM
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[***]
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First Commercial Sale of the Drug Product in US in NTM
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[***]
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Approval of an MAA by the European Medicines Agency for the Drug Product
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[***]
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Milestone Event
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Milestone Payment
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1.
Receipt on any positive trial report from the first Phase IIb Trial that are sufficient to support the advancement of Drug Product development with the Device into the first Phase III Trial
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[***] either in cash, Qualified Stock or a combination of cash and Qualified Stock; plus [***] in Qualified Stock
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2.
Initiaton of the first Phase III Trial of Drug Product with the Device
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[***] either in cash, Qualified Stock or a combination of cash and Qualified Stock
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3.
First Acceptance of MAA (or equivalent) submission in the US for such Drug Product with the Device
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[***] (in cash)
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4.
First receipt of Marketing Approval in the United States for both (i) such Drug Product and (ii) the Device
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[***] (in cash)
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5.
First receipt of Marketing Approval in the first of the Major EU Countries for both (i) such Drug Product and (ii) the Device, in the same Major EU Country
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[***] (in cash)
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Milestone Activity
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Milestone Deadline
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a.
Diligence Milestone 1
: initiation of First Phase III Trial for Bronchiectasis
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[***]
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Description
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Prices for United
States and Canada
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for each unit of [***]*
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See table below
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for each unit of [***]
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$[***]
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/s/ William H. Lewis
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William H. Lewis
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Chief Executive Officer
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(Principal Executive Officer)
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/s/ Paolo Tombesi
|
Paolo Tombesi
|
Chief Financial Officer
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(Principal Financial and Accounting Officer)
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(1)
|
the Quarterly Report on Form 10-Q of the Company for the quarter ended
September 30, 2017
(the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ William H. Lewis
|
William H. Lewis
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Chief Executive Officer
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(Principal Executive Officer)
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(1)
|
the Quarterly Report on Form 10-Q of the Company for the quarter ended
September 30, 2017
(the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Paolo Tombesi
|
Paolo Tombesi
|
Chief Financial Officer
|
(Principal Financial and Accounting Officer)
|